Sound Tek Inc. manufactures electronic stereo equipment. The manufacturing process includes printed circuit (PC) board assembly, final assembly, testing, and shipping. In the PC board assembly operation, a number of individuals are responsible for assembling electronic components into printed circuit boards. Each operator is responsible for soldering components according to a given set of instructions. Operators work on batches of 50 printed circuit boards. Each board requires 4 minutes of board assembly time. After each batch is completed, the operator moves the assembled boards to the final assembly area. This move takes 9 minutes to complete.
The final assembly for each stereo unit requires 21 minutes and is also done in batches of 50 units. A batch of 50 stereos is moved into the test building, which is across the street. The move takes 20 minutes. Before conducting the test, the test equipment must be set up for the particular stereo model. The test setup requires 30 minutes. The units wait while the setup is performed. In the final test, the 50-unit batch is tested one at a time. Each test requires 7 minutes. The completed batch, after all testing, is sent to shipping for packaging and final shipment to customers. A complete batch of 50 units is sent from testing to shipping. The Shipping Department is located next to testing. Thus, there is no move time between these two operations. Packaging and labeling requires 8 minutes per unit.
| 1) | |||
| Value added time : | |||
| Assembly time | 4 | ||
| Boards assembly | 21 | ||
| Time to Test one unit | 7 | ||
| Pack and Shipment Labeling | 8 | ||
| Total | 40 | ||
| Non-value-added time: | |||
| Wait Time: | |||
| Within batch wait time - assembling (4*50) | 200 | ||
| Within batch wait time - final assembly (50*21) | 1050 | ||
| Within batch wait time - testing (50*7) | 350 | ||
| Within batch wait time - shipping (50*8) | 400 | ||
| Total Wait Time | 2000 | ||
| Move Time | |||
| Move from stamping to final assembly | 9 | ||
| Move from final assembly to testing | 20 | ||
| Total move time | 29 | ||
| Total Non-Value-added time | 2029 | ||
| Total Lead Time (40+2029) | 2069 | ||
| Value added ratio(40/2069) | 1.93% | ||
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